The recent steep hike of 75 basis points in the South African Reserve Bank’s repurchase rate and subsequent rise in the prime lending rate to 9% is significant for consumers and the remainder of this year will be tough for many South Africans as they struggle to cover household expenses.
Goosen said the latest TransUnion Consumer Pulse Study for the second quarter of this year showed that 56% of consumers said they were likely to default on at least one of their bills and loans in the next three months. More than half of the households surveyed said they would have to cut back on discretionary spending because of continued inflationary pressure.
“Despite headwinds to the global economy, the MPC expects South Africa’s economy to grow by 2%, revised up from 1.7%. It noted in its statement that growth in output in the first quarter of this year surprised to the upside at 1.9%, stronger than the 0.9% expected at the time of the previous meeting.”
This is considered to be a sign of future strain on the economy, although the report states that there is still economic growth on the cards for South Africa in the second quarter of 2022. “In our experience, we have seen increased sales along the Garden Route in three-plus bedroom hoses, this is due to the average family of four seeking to semigrate and in turn needing space to work at home – fourth room for a study or office,” said Goosen. This trend is continuing.
Goosen said that sales in the Eastern and Western Cape are in the upper market segments and are due mainly to semigration and the market recovery in the previous quarter. He also attributes less time on the market due to the buoyancy of the mid-tier market, for now.